Waiting for the Next McMansion to Drop

Wall Street Journal ^ | 22 October 2009 | James R. Hagerty

[Lorianne]

Despite some tentative signs of recovery, the U.S. housing market remains vulnerable to further price drops—especially in areas where large numbers of mortgages are headed toward foreclosure over the next few years.

The Wall Street Journal's quarterly survey of housing-market data in 28 major metro areas shows sharp drops in the number of homes listed for sale across the country. But the potential supply of homes is far larger because banks are likely to acquire significant numbers of foreclosed homes in some areas, notably Las Vegas, Atlanta, Detroit, Phoenix, Miami and other parts of Florida, and Sacramento, Calif., over the next few years.

Sales of those homes may depress prices further. By contrast, metro areas with relatively low foreclosure and mortgage-delinquency rates include Boston, Denver, Minneapolis, San Francisco, Seattle, Raleigh, N.C., and Portland, Ore., making them less vulnerable.

The supply of foreclosed homes listed for sale has dwindled largely because of government-mandated efforts to save as many borrowers as possible from losing their homes. That campaign has gummed up the foreclosure process, slowing the flow of houses into bank ownership—but only temporarily.

Over the next few years, housing analysts believe, millions of other homes are heading for bank ownership, but no one can say how long that will take or when a sudden torrent of bank-owned properties may swamp certain local markets.

[Ghost of Philip Marlowe]

“The supply of foreclosed homes listed for sale has dwindled largely because of government-mandated efforts to save as many borrowers as possible from losing their homes.”

When has the government ever been so kind?

This is not the reason.

The real reason is that regulators are colluding with banksters to hide these foreclosures? Why? As long as they are in default but have not been foreclosed upon, the banks can mark them as ASSETS. As soon as they foreclose, each mortgage switches from ASSET to LIABILITY. If every bank foreclosed on those defaulted mortgages it SHOULD foreclose upon, the country would see how many THOUSANDS of banks are already insolvent.

This is another attempt by the government to keep inflated a bubble that has begun to burst but still has a long way to go.

A large wave of Alt-A’s and OptionARMs are due to reset beginning in 2010. These will dwarf the subprime mess. And the there is commercial real estate, which is also do for a massive correction.

It is going to take years for this real estate bubble (created by SLICK WILLY CLINTON to hide the bursting tech bubble and help create the LIE of “8 years of peace and prosperity” and perpetuated by George W. Bush) to correct itself and for real estate to find its true market value.

A lot of people are going to lose a lot of “wealth” in the process. But it was only wealth on paper and never really existed. Just like those who have “wealth” again because the Dow is at 10K don’t really have that wealth unless they cash out.

[Lorianne]

I have to agree with all of that.